Another take on Asia
Victor
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Latin American Trade Specialist, LLC - March 26,1998
Asia's Economic Weakness Could
be Brazil's Strength
by Elliot Uchitelle, President of Latin American Trade Specialists
The big concern for many months has been whether or not Asia's economic crisis
would spread to Latin America. Brazil in particular was viewed by many financial
analysts as susceptible to an economic crisis similar to those seen in many Asian
countries. Analysts feared a run on Brazil's currency similar to the huge devaluations seen
in the Asian currencies. And now a number of analysts are predicting that the devalued
Asian currencies will hurt Latin American economies because these economies will be
flooded by cheap Asian importers. The rise in Asian imports will worsen the current
accounts of Latin American countries, so goes this logic, which will force Latin American
governments to devalue their currencies which in turn will lead to a rise in inflation.
Now, however, a better question may be whether the Asian economic crisis may
in fact benefit Latin American countries, especially Brazil. Given the decreased economic
demand and financial difficulties in the Asian countries, a number of U.S. businesses that
had planned to export to or invest in Asia will now focus their export strategy on Latin
America.
The aerospace industry is a case in point. According to a recently issued report,
Thailand canceled a contract to buy eight F/A-18 fighter jets made by the Boeing
Company; South Korea delayed a decision to buy F-15s; and Indonesia reversed its
decision to buy F-16s manufactured by Lockheed Martin.
The logical response by U.S. companies such as Boeing and Lockheed is to
replace these lost Asian sales with exports to and investments in Latin America. Many
U.S. companies will not only attempt to export more to Latin America but will also
invest money in Latin America that had earlier been earmarked for Asia. The increased
attention by U.S. companies on Latin America can only benefit it in the long run. There
will be more direct investment in Latin America by U.S. businesses. This investment will
enable Brazil and other Latin American countries to fund their current account and build
up much needed foreign reserves. And the need to export more to Latin America to
make up for lost Asian exports should result in falling import prices, which in turn will
help Latin American countries fight the important battle against inflation.
The Asian crisis may have initially presented a problem for Brazil and other Latin
American countries. But it now looks much more like a big opportunity rather than
something to be feared.
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B Band: Area 6 auction scheduled for April 14
Sao Paulo, 06 - The B Band concession for area 6 (Rio Grande do Sul) should be
announced next April 14th, the Telecommunications ministry informed today. The
ministry will publish its announcement tomorrow at the Di rio Oficial, the Brazilian
equivalent to the US Official Register. (By Gustavo Paul). |
